SEE YOU IN COURT?

June 09, 2010 11:09 AM

Arbitration as an alternative for settling disputes in Curacao

Enterprises with a legal dispute can turn to the courts; however, instead of litigating in court, they can also opt for arbitration.

Arbitration is a form of private dispute settlement in which the parties instruct one or more people (arbitrators) to render a binding decision on their dispute. The arbitrators may be jurists however that is not necessary. People with specific expertise or experience in a certain branch of industry are often chosen.

Parties can include a so-called arbitration clause in their contracts, on the basis of which they opt, in advance, for the settlement of any disputes related to the contract via arbitration. They may also choose to opt for arbitration after a dispute has arisen between them.

What if, once a case has been resolved in the favor of one of the parties, the other party does not keep to the arbitral decision? If one of the parties does not adhere to the arbitral decision, the other party may revert to the courts to enforce the arbitral decision. This does however not mean that the Court will examine the merits of the case again. The procedure is simple and fast; the Court will, in brief, only test whether certain procedural rules have been observed and whether the enforcement of the arbitral decision is not contrary to public order or good morals.

Why opt for arbitration instead of a government court? One advantage of arbitration was just mentioned: the parties themselves can influence who is appointed as (expert or not) arbiter(s). That is not possible with a government courts. For example, in a construction dispute between a contractor and a client, it may be useful to have one or several architects on the arbitration board. In the Netherlands, a number of branches of industry have their own arbitration institute, for example the Arbitration Board for the Graphic Industry or the Arbitration Board for the Building Industry.

Another advantage is that parties can exercise some influence on the procedural rules. Parties often exclude the possibility of appeal, so that arbitral procedures may proceed faster than a lawsuit in a government court.

In addition, it may be an advantage that arbitral decisions are not public. Rulings of the government courts are in principle public. If, for instance, a corporation does not want its trade secrets known on the street, arbitration can be the way to go.

A disadvantage of arbitration could be that the costs may mount substantially. The salary of the arbitrators must, after all, be paid by the parties themselves. However, as far as international commercial disputes are concerned arbitration can in fact turn out to be cheaper, for example, as an alternative to long drawn-out lawsuits in America.

Arbitration is often applied in international business transactions. In international trade contracts, arbitration is increasingly favored. Parties often declare the procedural rules of a recognized international arbitration institute applicable, such as that of the International Court of Arbitration or the International Chamber of Commerce. The Netherlands is a popular forum for international commercial arbitrations on the basis of the arbitration rules of the renowned Dutch Arbitration Institute (NAI).

An arbitration institute has also been established here in Curacao, namely the Arbitration Institute of the Netherlands Antilles and Aruba (AINAA). Arbitration is however relatively seldom used here. One wonders why? One explanation could be that there is considerable confidence here in the courts. The courts are accessible, lawsuits can be carried through (relatively) quickly and the costs are (again: relatively) low. However the most important explanation is probably that arbitration as an alternative method for settling disputes is relatively unknown here.

The use of arbitration in disputes on specific issues (for example construction, insurance, accountancy, trust) can also be interesting in Curacao. Additionally Curacao could be an attractive forum for international commercial disputes.

In order to put Curacao on the arbitration map a well-known arbitration institute and renowned arbitrators are required. The AINAA is currently working hard on further professionalizing their institute. There are also plans to organize a symposium to give more publicity to the arbitration phenomenon. The first steps towards a flourishing arbitration practice have therefore been taken, providing the enterprises in Curacao with a good alternative to the courts: “See you in arbitration” instead of “See you in Court”!

Annemarijke Bach Kolling
Attorney – Spigthoff Curacao

4 June 2010